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Thursday, April 29, 1999 Published at 13:48 GMT 14:48 UK

World: Europe

Analysis: Turning off Serbia's oil supply

Yugoslavia's oil industry has been one of Nato's main targets since the alliance began its bombing campaign just over a month ago.

Kosovo: Special Report
Now the alliance is seeking to tighten the noose still further with an embargo on oil supplies, which are vital to any prolonged campaign by its armed forces and to keep the civilian economy going.

Before the bombing, a quarter of Yugoslavia's oil supplies came from its own fields, while much of the rest arrived by pipeline from Croatia. This infrastructure, as well as the country's two big refineries, has now been devastated and Yugoslavia has had to turn to importing refined products by sea.

[ image: Yugoslav oil arrives at the port of Bar, Montenegro]
Yugoslav oil arrives at the port of Bar, Montenegro
Oil has been entering Yugoslavia on Greek ships, according to Peter Huggins of the International Energy Agency in Paris. Some of the oil could be Russian, from trading companies operating out of the Netherlands.

The American oil giant Texaco has also sent a big cargo of petrol to the Montenegrin port of Bar.

Role of Russia

With the imposition of a Nato and European Union oil embargo, policed by Nato forces, Yugoslavia may look to Russia to keep itself supplied.

Russia was a supplier before the crisis and could be willing to keep selling oil to smugglers. So far there has been no clear sign of Moscow agreeing to stop selling oil to Belgrade.

[ image:  ]
There have also been signs that Belgrade could be looking further afield for help - Yugoslav Deputy Prime Minister Zoran Lilic has recently visited Tripoli for talks with Libyan leader Muammar Gadaffi.

Nevertheless, UK Foreign Secretary Robin Cook says an oil blockade of Yugoslavia would be effective in starving Serb forces of vital fuel even if it did not apply to Russian tankers.

An oil embargo by Nato and EU countries and the aspiring EU members of central and southern Europe would stop 75% of the oil normally reaching Yugoslavia, according to UK Foreign Office sources.

In addition, Mr Cook has said the bombing of bridges over the Danube means the river is effectively closed as a route for oil-carrying barges.

Overland supplies

Faced with this situation, Serbia is likely to turn to overland routes for its oil products - crude oil is of no use as refineries have been destroyed.

[ image: Cigarettes, sugar and cooking oil are in short supply in Serbia]
Cigarettes, sugar and cooking oil are in short supply in Serbia
Many analysts believe Yugoslavia might be able to import significant quantities of fuel by road from some of the seven countries bordering it. Some, like Nato member Hungary, are likely to clamp down hard on smuggling, but others, such as Bulgaria and Romania, may neither be able to, nor want to.

There are large profits to be made by individuals smuggling oil, and a black market in oil products is a likely result.

Channels may also be found through some of the former Yugoslav republics, according to Leo Drollas of the Centre for Global Energy Studies in London:

"Although Croatia and Serbia fought a war, they are fellow Slavs and there are still some Serbs in Croatia. And of course there's Bosnia-Herzegovina which also has a large Serb population," he says.

"These borders are obviously policed but there's always scope for smuggling, especially if the authorities are willing to turn a blind eye at various times."


Serbia could also have big stockpiles of oil for military use, hidden away from the normal storage facilities which make obvious targets for Nato.

Before the current crisis, Yugoslavia was importing 50,000 barrels of oil a day, and it is difficult to to see how such quantities could be brought in by road alone.

Sooner or later, if overland deliveries become Yugoslavia's major source of imports, the country is likely to face a chronic oil shortage.

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